Mutual Fund News

ME AND MY MONEY

By LARRY MACDONALD

Saturday, October 18, 2014

Special to The Globe and Mail

PRAVEEN CHAWLA, 55

Occupation

Pharmacist/mid-level manager in a pharmaceutical company

Portfolio

About 80 per cent of his "midseven-figures" portfolio is in stocks, the seven largest positions being Johnson & Johnson, Merck & Co. Inc., Procter & Gamble Co., CIBC, Bank of Montreal, Canadian National Railway Co. and Union Pacific Corp.

The investor

Praveen Chawla started investing in 1999 after changing jobs and cashing in some stock options. His compound annual growth rate to date is approximately 10 per cent, he reports.

How he invests

Mr. Chawla's performance reflects a value/contrarian investment style. He bought CIBC and BMO "during the financial crisis [of 2008] when they were selling at fire-sale prices." Merck was purchased during the Vioxx drug scandal in 2004. CN and Union Pacific were acquired "almost 15 years ago when the railway industry was depressed ..." Once a stock is bought, it's held for the longterm. "Most money is made when you let money quietly compound in well-run companies."

"I subscribe to several online services like Morningstar.com, and regularly read Standard and Poor's stock reports via my brokerage." He believes materials and energy companies are now out of favour. Some of their stocks are on his accumulation list.

Qualcomm Inc., a supplier of advanced chips to mobile-phone companies, is getting close to his buy price of $70. The company has "a wide technological moat" thanks to its patent portfolio and heavy spending on research.

Best move

"I invested heavily into the 2008 to 2009 downturn. I started buying in the spring of 2008 and this caused serious losses initially ... but it worked out well in the end."

Worst move

"Investing in U.S. and European financial stocks during the financial crisis. ... I took contrarianism too far and kept on buying falling knives."

Advice

"As the greatest speculator of all time, Jesse Livermore, said, 'it never was my thinking that made the big money for me. It was always my sitting. Got that? My sitting tight!' "